The Federal Reserve Board ("FRB") released individual capital requirements for large banks. The requirements are meant to ensure that the large bank holding companies ("BHCs") and U.S. intermediate holding companies ("IHCs") with $100 billion or more in total consolidated assets will hold sufficient capital to ensure that they could survive a "severe recession," and "still be able to lend" during that recession.
The FRB determined that the large bank capital requirements will include (i) a minimum capital requirement of 4.5 percent, (ii) a stress capital buffer requirement of at least 2.5 percent based on supervisory stress test results and (iii) a capital surcharge for global systemically important banks of at least 1.0 percent. The common equity tier 1 capital requirements for this group of BHCs and IHCs range from 7 to 13.4 percent.
The capital requirements will go into effect on October 1, 2021.
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